Cryptotechnology Beyond Prohibition: An Interview with Bitruble Project Managers

News and Analysis

Earlier this September, Russias largest payment processor QIWI has announced its plans to launch its proprietary cryptocurrency dubbed bitruble.

The news agitated people within cryptocurrency community and beyond. Almost immediately upon the announcement Russian media environment got filled with often controversial musings as to the project itself and cryptocurrencies in general. ForkLog contacted with Alexei Arkhipov, QIWIs cryptocurrency development executive, and Konstantin Koltsov, QIWIs external project environment development executive in order to find out some details behind the mere news.

Below is an exclusive interview on cryptocurrency regulation peculiarities, Russian Central Banks stance as to digital currencies, and QIWIs research and Bitruble project essence according to its managers.

ForkLog: Shortly after your announcement on the plans to launch bitruble, financial ombudsman Pavel Medvedev was quite critical calling the idea technical hooliganism. Furthermore, he added that the very idea was illegal. What are your comments concerning his statements? Have they resulted from some lack of competence as to the issue, or there is something more substantial underlying them?

QIWI: There cant be a single opinion regarding that matter; however, Dmitri Peskov of Strategic Initiatives Agency once noted that Pavel Medvedev is not just sufficiently qualified, and offered him to have a training course at the agency. Nowadays we may see polar opinions arising and spoken on behalf of various market players and social groups. The Central Bank took a positive view of our initiative. Elvira Nabiullina (chairwoman of the Russian Central Bank ForkLog) said that the Central Bank was not going to ban cryptotechnology. The bank is researching them now. The Central Bank just needs some time to understand how to regulate that brand new area.

ForkLog: What, in your opinion, are the reasons for those regulation issues?

QIWI: First of all, globally there is not a single example of cryptocurrency industry regulation. No source or business activity are available to provide a ready-made model for improvement on the basis of the phenomenons features. Thats where intrinsic difficulties come from: it is related to understanding how to regulate cryptotechnologies in years to come. We dont know of any example or any report describing the regulation process in professional terms. It covers global regulation within a whole country in the first place. Yes, there are some visionary documents depicting images of a glorious future, but actually, there are no professional documents applicable for regulation within current situation.

ForkLog: What do you think of probable cryptocurrency ban in Russia? Could this involve cryptotechnologies as well?

QIWI: We think that cryptotechnology is beyond any prohibition. QIWI is a major processor, and load operation has always been a pressing challenge for us. Wed be happy to reduce costs for back-office thats where our development actually originates. We are interested in anything that could reduce costs and expenses related to end-user services. In fact its a different side to the issue: there is not a single reason to ban a contemporary technological solution. The Central Bank is hardly interested in prohibiting someone to optimize their technological procedures. Recently German Gref said he was buying bitcoins for $900 however, he is well known for his positive stance as to cryptotechnologies. We know that Sberbank (one of Russias biggest state-owned banks ForkLog) has been testing blockchain technology for its internal systems implying that it could optimize the expenses. We would be truly happy if they manage to establish a comprehensive regulatory model within entire Russia; it could be a precedent. If there is a major player capable of covering the entire country, it would be both technological and regulatory breakthrough. Thus, Russian Central Bank could serve as an example for other countries national banks. In fact, those objectives are more than ambitious.

ForkLog: Lets speak about the projects name. Why bitruble? Is this the final naming, or there could be some alterations?

QIWI: The name was invented quite recently in fact, when it became necessary. It should be capitalized when written similarly to ruble. For now, its more like a working title as there are some troubles involving English translations thereof. While choosing the name we just used an acronym we liked like it worked with BitUSD or BitEUR. So it is possible that the name will change in the future; however, we cannot say anything about it for now. As you probably know, we submitted an application to RosPatent on trademark registration; the application is under consideration now, so this side of the process is launched now.

ForkLog: For how long QIWI has been into cryptocurrency studies? Was it a long way between the first concept and issuance of initial versions?

QIWI: Our company has been researching cryptotechnologies for like a year, maybe a bit more. It took us about six month to go from the idea to project launch, so it was pretty fast in fact.

ForkLog: Did you use a third-party experience while developing the project?

QIWI: We used our own experience in the first place. Being a pretty large payment system, we know the market well. Of course, weve been studying and still study market-available technologies, and carry out internal testing within the company.

FokLog: There were announcements that bitruble was to be a backed currency. Does it mean that bitruble is actually a protocol switch for QIWIs e-money?

QIWI: Bitruble is primarily oriented at domestic market, and hypothetically it could be backed by national currency.

ForkLog: Have you worked with digital assets issuance platforms like NXT? Did you consider work with smart contracts, Ethereum platforms, or other technologies within the project? Generally, how do you assess their potential for Bitruble project?

QIWI: NXT is a completely different matter, and presently were not ready to discuss it. Indeed, we analyzed smart contracts and Ethereum, and keep them within our line of sight, but for now we cannot say whether any of those could underlie bitruble to some extent. Previously we mentioned blockchain technology and BitshareX, and as for now, nothing has changed.

ForkLog: In technical terms, has bitruble some resemblance to the existing formats like Bitcoin or Ripple, and, if so, which ones? Will it be centralized or decentralized?

QIWI: Wed like to keep it under wraps for a while. Our company is amongst the markets major players, and we are not willing to build up an artificial interest to our designs.

ForkLog: What is bitrubles connection to QIWIs payment system? Will it be launched as a separate QIWI-affiliated brand, or it would be a separate enterprise?

QIWI: For now, its hard to say whether it becomes a separate project or a QIWI-affiliated enterprise. Currently we are mostly focused on technological components. Eventually, everything is at the regulators discretion. Certainly, we are ready to release the project in 2016, but we have to wait for the Central Banks reaction; its opinion and vision as to when and how it has to happen is important.

ForkLog: What is bitrubles target audience? Is it an independent technological product for masses, or it is geek-oriented?

QIWI: In terms of our processing, bitruble is not a final product. As soon as the solution works, additional add-ins and options will inevitably follow. We dont expect to create a widely-adopted and commercially successful product at once, as the process is unforeseeable. Were considering several possible scenarios depending on acceptance and distribution rate of bitruble.

ForkLog: What is your vision of cryptocurrencies further evolution?

QIWI: Cryptotechnologies are the internet for the fintech. It is quite expected that the situation will shift towards mass adoption of those technologies. For now were implementing, testing, and observing, but the regulatory framework issue is still on. Also we think that community will eventually devise a way to make Bitcoin scalable, as there are some insights regarding that matter like side chains, enhanced performance forks, etc. Eventually, there will be a standard allowing us to process sufficient amounts of transactions. We think theres not too much time left until it happens.

ForkLog: Do you intercommunicate with expert communities in the course of Bitruble project development?

QIWI: Were open for the expert community. People come, share their ideas, we interact with experts and call for consolidation regarding those matters. To be honest, if we consider cryptocurrency not as a niche-oriented invention, but as a real future technology, I doubt that any company could ever acquire the whole market. Those who try to create a proprietary product in order to dominate the market will lose the race. Wed be happy to joint our insights with those who will implement it, those who can do it professionally, those who have processing capacities, expert teams, and their own insights. We cannot ignore that technologies evolve in global scale.

Toly Kaplan exclusively for ForkLog

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